Presented by-Kinshuk khannaIla singh

Stuart Slatter is currently Chairman of Stuart Slatter Training Ltd and was a professor at the London Business School (LBS) for over 30 years. He is a graduate of Cambridge University, has an MBA from Stanford Business School and a PhD from London University. He is the author of several management books including Corporate Recovery (Penguin 1984), Gambling on Growth (Wiley 1992), High Tech Turnaround (Financial Times 2002) and joint author with D. Lovett and L. Barlow of Leading Corporate Turnaround (Wiley 2006).

David Lovett is currently a Managing Director with AlixPartners in London and Co-lead of AlixPartners Turnaround and Restructuring operations in Europe, The Middle East and Africa. David was formally a partner at Arthur Andersen where he formed and subsequently led the Global turnaround practice. He has worked with and for all the different stakeholder classes. He is a Fellow of the Institute of Chartered Accountants in England and Wales, a Fellow of the Institute for Turnaround and a business graduate.

ABOUT THE AUTHOR

AIM OF THE BOOKThe aim of this book is to describe the corrective actions management needs to take to achieve recovery in a turnaround situation

This is an ambitious book which covers the full range of turnarounds/performance – improvement issues. It provides the reader with clear insights into creating and implementing an effective turnaround.

This model stresses an overlap of planning and implementation activities. Crisis management and regular business planning have to be handled simultaneously and a number of generic strategies implemented parallel and vigorously, which pays contribute to the extreme time pressure in a crisis situation.

ABOUT THE BOOK

A situation where financial performance of a firm indicates that the firm will fail in the foreseeable future unless short term corrective action is taken.

The process of moving from a period of losses or low profitability into a more profitable stage. A turnaround may be triggered by a number of factors, including a better use of assets or the development of new products and services.

It recognizes that firms often exhibit symptoms of failure long before any crisis begins

What is turnaround situation?

Take control and manage the immediate crisis

Rebuild stakeholder support Fix the business Resolve future funding

OBJECTIVES OF TURNAROUND SITUATION

INSOLVENCY

DECLINE

MATURITY

GROWTH

STARTUP

loss

profit

CORPORATE LIFE CYCLE

INTERNAL CAUSES Poor management Inadequate financial

control High costs Lack of marketing effort Financial policy Poor working capital

management

EXTERNAL CAUSES Change in market demand Competition Adverse movements in

commodity prices

CAUSES OF CORPORATE DECLINE

Management change - consultants may be called in to manage the turnaround of the firm.

Situation analysis - a situation analysis is performed to evaluate the prospects of survival. Assuming the firm is worth turning around, depending on the root causes of the distress one or more of the following turnaround strategies may be selected and presented to the board: Change of top management Divestment of certain assets Reformulation of strategy Revenue increase Cost reduction Strategic acquisitions

STAGES OF TURNAROUND MANAGEMENT

• Emergency action plan - achieve positive cash flow as soon as possible by eliminating departments, reducing staff, etc.

• Business restructuring - once positive cash flow is achieved, the strategic plan is implemented, improving continuing operations, adjusting the product mix and repositioning products if necessary. The management team begins to focus on achieving sustained profitability.

• Return to normalcy - the company becomes profitable and the changes are internalized. Employees regain confidence in the firm and emphasis is placed on growing the restructured business while maintaining a strong balance sheet.

SEVEN KEY INGREDIENTS GENERIC TURNAROUND STRATEGIES

1. Crisis stabilization Taking control Cash management Short term financing

2. Leadership Change of CEO Change of other senior

management

3. Stakeholder support Communications

4. Strategic focus Outsourcing Downsizing Investment Product market refocusing

KEY INGREDIENTS FOR SUCCESSFUL TURNAROUND

5. Organisational change New terms and conditions of employment

Structural changes Improved communications

6. Critical process improvements

Cost reduction Improved sales and marketing Improved control systems Quality improvements

7. Financial restructuring Refinancing Asset reduction

THANK YOU